John Cameron's personal blog

Serious discussion about your financial position now - and in the future.

Who Spotted The Recent Black Swan Event?

Black Swan Events are things that happen, but nobody sees them coming. Mostly the term relates to events in the financial world, where markets change suddenly, without apparent warning. Examples include the GFC, and the 1987 sharemarket crash.

Black Swan events can also occur in our personal lives, such as when a close family member is struck down by a sudden illness, out of the blue and with no warning. A current example is diver Taneka Kovchenko, who had to withdraw from the Commonwealth Games because of a medical diagnosis that “one dive gone wrong could turn her into a paraplegic”.

Then there is the example of Tim Paine. Who, 12 months ago would have tipped him to be Australia’s captain? He had a record as an outstanding wicketkeeper, but his career was hampered by serious injury (a broken finger that took several surgeries to heal), and at the start of the season he was playing for Tasmania as a batsman, and seemed to be on the way out of first class cricket.

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A New Approach to Retirement Income

Most of the principles, ideas and guidelines around how to structure retirement income, have been developed by theoreticians, and are often impractical and out of touch.

Now, a financial planner with decades of practical experience, has produced a booklet that looks at the performance of different asset classes over almost 50 years. The main conclusion   –   there is no “best” answer across all times. It depends.

To download a copy, go to: http://www.blackswanevent.com.au/landing-page-lump-sum 

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A New Approach to Retirement Planning

I’m going to stick my neck out just a bit and say that: “Retirees have got a raw deal over the last couple of decades”.

Nothing new there you might say. But, what I am referring to is the advice that has been available to retirees when it comes to investing their superannuation to produce an income stream.

And, no, this is not another diatribe against financial advisers, as the problem lies much deeper.

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Black Swan Events and Portfolios

The term “Black Swan Events” has a particular meaning in investment circles.

The term refers to events that are unexpected and unforeseen. They can be either negative or positive, but such is human nature that the main focus is on negative events and their consequences. One recent Black Swan Event was the GFC in 2007 – 08. The GFC damaged a lot of people, and the overhang is still with us.

Generally, the term is used in financial markets, but then again, it can just as much be personal, and close to home – a sudden family illness, a major accident, or finding your home is riddled with white-ants and in need of major repairs. All of these could be very costly.

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Retirement Income - Where is it?

Recent reports in The West Australian have shown people nearing retirement are confused, with many planning to keep working beyond the “normal” retirement age of 65.

The state of confusion is hardly surprising, given the unique financial times we are in, and the mixed and often contradictory signals that emanate from various sources (who often are pushing their own barrow.)

Talking about mixed signals, let’s start with the stockmarket. Every night, commentators fill our television screens, with graphic accounts of how much the market has gone up, or down during that day. Even if nothing has happened, they still go to great lengths to make it graphic. But, then I guess that is the nature of television. A factual statement such as “nothing much happened on the market today”, - next story please -  would hardly have viewers glued to their sets. After all, there are ratings to think about, aren’t there!

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